A total of four Third Generation (3G) mobile licences will be awarded via an auction in Singapore. This decision was reached after extensive study of the infocommunication landscape and taking into account industry views.
Singapore, 20 October 2000 | For Immediate ReleaseA total of four Third Generation (3G) mobile licences will be awarded via an auction in Singapore. This decision was reached after extensive study of the infocommunication landscape and taking into account industry views. The experiences of other countries1 in the allocation of 3G spectrum and licences were closely studied, from the perspectives of both operators and regulators in these countries.
The Government is confident that this 3G licensing framework will result in the rapid deployment and provision of innovative 3G services" said Mr Yeo Cheow Tong, Minister for Communications and Information Technology. "This will contribute to the development of a vibrant and competitive mobile communications market, which will ultimately benefit Singaporean consumers and the national economy". The Government's overall objective is to position Singapore as a leading regional info-communications hub for wireless activities, and to encourage competitive prices for end-users and businesses.
Auction to Award 3G Licences
Radio frequency spectrum is a scarce and valuable resource. For this reason, the Government feels its allocation should be objective, efficient and transparent. The auction method was determined to be the most suitable mechanism for allocating this resource to the bidders. This is in line with the experience of countries which have utilised the auction method to allocate 3G licences, including UK, Germany, Denmark and Netherlands.
Two basic approaches have been taken by countries who have allocated 3G licences. These are the auction approach, in which the bidders determine the cost of the 3G spectrum; and the "beauty-contest" approach, in which the government evaluates proposals from interested parties using certain pre-determined criteria. The Singapore Government decided to use the auction method because it allows the market to allocate scarce spectrum to the bidders who value it the most. Given the current immaturity of 3G services and technologies, it is difficult to set, judge and enforce appropriate evaluation criteria required for a "beauty-contest". Traditional, quantitative yardsticks such as network coverage may also not apply to the 3G business model. The Singapore Government believes that issuing licences via a beauty contest will ultimately be subjective. This is not an optimal outcome in the context of Singapore's strategic objectives.
Some governments have also utilised a hybrid approach, which combines selected features from auctions and "beauty contests". Hybrid variations include a beauty-contest followed by an auction, and a beauty-contest with fees. The difficulties involved in these approaches include setting appropriate evaluation criteria and determining an appropriate licence fee.
While an auction may involve up-front costs to successful bidders, there will be several 3G operators and virtual network operators, and market forces will ensure that the operators will price 3G services competitively.
The measure of success of this 3G licensing exercise will be whether we are able to attract innovation applications from both local and international Telco into the Singapore market. To maximise the attractiveness of Singapore to bidders who have the capacity to offer innovative services at reasonable prices, the Government is setting, the auction reserve price at $150 million. The auction reserve price refers to the initial price level from which the auction bidding will commence. Setting the reserve price at this conservative level underlines the Government's interest in using the market mechanism as a means of allocating resources and not merely to raise revenue.
Number of 3G Licences
The number of 3G licenses to be issued is determined by both technical and market considerations. The UMTS (Universal Mobile Telecommunications System) Forum recommends that public 3G operators require 2x15MHz paired spectrum to support high-bandwidth and full multimedia capability. The winning licenses will be each allocated 5 MHz of unpaired spectrum. The availability of 2x60MHz spectrum in Singapore means that four operators may be supported. In addition, four operators in the market would ensure that there is at least one new entrant into the mobile communications area. This will help to spark innovation and boost competition.
Timeframe
Final documentation on auction rules and related policy issues will be published in December 2000. Shortly after, the operators will be invited to submit their intent to bid. The auction will be conducted in February 2001.
The Future of 3G
Commenting on the future of 3G in Singapore, Minister Yeo said, "We believe that 3G will revolutionise mobile communications in Singapore. And, the Government is confident that an open and transparent 3G licensing framework will facilitate the rapid deployment of 3G infrastructure and services. Given Singapore's compact size and advanced infrastructure, world class 3G operators will find Singapore an attractive 3G test-bed, both in terms of cost and implementation. Taken together with Singapore's Internet and technology savvy population - and our business friendly environment -the Government is certain that 3G operators will find the Singapore market attractive."
The introduction of 3G into Singapore is just one step the Government is taking to aggressively develop and promote Singapore as a broadband wireless hub. To achieve this goal, the government is systematically investing in programmes such as facilitating the development of a world-class broadband infrastructure, growing rich broadband multimedia content, and promoting research collaboration in broadband-related technologies between the industry, research centre and tertiary institutions. The Government is also committed to re-investing some part of auction revenues back into the industry through developmental grants and incentives. Details of the Government's development plans will be released shortly.
INFOCOMM DEVELOPMENT AUTHORITY OF SINGAPORE
Notes to the Editor
1 Examples of countries whose 3G experiences have been studied include Finland, Netherlands, UK, Germany and Australia.
About Infocomm Development Authority of Singapore
The Infocomm Development Authority of Singapore (IDA) is a dynamic organisation with an integrated perspective to developing, promoting and regulating info-communications in Singapore. In the fast-changing and converging spheres of telecommunications, information and media technologies, IDA will be the catalyst for change and growth in Singapore's evolution into a vibrant global info-communications technology centre. For more information, visit www.imda.gov.sg.
For media clarifications, please contact:
Ms Jennifer TOH
Manager, Corporate Communication
Infocomm Development Authority of Singapore
Tel: +65 211-0508
Fax: +65 211-2227
Email: jennifer_toh@imda.gov.sg
Ms Dulcie CHAN
Manager, Corporate Communication
Infocomm Development Authority of Singapore
Tel: +65 211-1999
Fax: +65 211-2227
Email: dulcie_chan@imda.gov.sg
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